Journal article
Market power in tobacco: Measuring multiple markets
Agribusiness (New York, N.Y.), Vol.23(1), pp.35-55
2007
Handle:
https://hdl.handle.net/2376/115589
Abstract
Traditional market power analyses of the U.S. cigarette manufacturing industry consider monopoly power exertion by manufacturers in selling cigarettes to consumers. Market characteristics combined with government policy make it plausible that manufacturers exert monopsony market power in procuring tobacco. We investigate this possibility in the U.S. and international tobacco markets by extending nonparametric tests to include simultaneously potential monopoly market power with potential monopsony market power in multiple input markets, allowing both Hicks‐neutral and biased technical change. We use annual data from the cigarette manufacturing industry from 1977 to 1993. Results indicate substantial departures from competitive pricing in the procurement of domestic tobacco, supporting the postulate that cigarette manufacturers appropriate monopsony rents despite, and perhaps at times through, U.S. tobacco farm policy. Results are less clear with respect to monopsony market power exertion in imported leaf tobacco procurement by cigarette manufacturers. Finally, results indicate that monopoly market power exertion is relatively small and that, when the possibility of monopsony market power exertion is admitted, monopoly market power exertion is no longer problematic.[EconLit citations: L100, L660]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 35–55, 2007.
Metrics
5 Record Views
Details
- Title
- Market power in tobacco: Measuring multiple markets
- Creators
- Kellie Curry RaperH. Alan Love
- Publication Details
- Agribusiness (New York, N.Y.), Vol.23(1), pp.35-55
- Academic Unit
- Economic Sciences, School of
- Publisher
- Wiley Subscription Services, Inc., A Wiley Company; Hoboken
- Number of pages
- 21
- Identifiers
- 99900548108001842
- Language
- English
- Resource Type
- Journal article